Tuesday, August 31, 2010

Giving money instead of food, the pros and cons

During the last few disasters in the world, the idea of giving cash to the victims has grown in popularity. Because there is still food in the shops of Pakistan, aid groups are giving cash to the flood victims so they can go out and buy it themselves. This practice puts more money into the system, but some fear it could spike inflation right after a crisis.

From this Associated Press article that we found at the Seattle PI, writer Zarar Khan and Chris Brummitt give us both sides of the cash aid debate.

Some large charities have already begun handing out money to victims of this summer's devastating floods and others say they have plans to so, continuing a trend that began in earnest after the 2004 Indian Ocean tsunami and has picked up pace ever since.

But some in the humanitarian community remain resistant to the idea, especially those in the larger U.N. agencies, where there are fears that cash can cause inflation and fuel corruption. Many Pakistanis apparently share the same concern. They have preferred to give food, clothes and medicine to flood victims instead of money because of worries it could be misused....

While aid groups use the term "cash-based programming," actual money is rarely given because of security reasons. The assistance is mostly in the form of checks, vouchers, food stamps or remittances at banks.

Some aid experts say the resistance to cash by some aid groups is as much cultural as anything else. They say it challenges deep-seated and largely unspoken assumptions that Western countries know best what the poor in developing countries need.

Several studies have shown that a main argument once used against giving cash - that recipients would spend it on cigarettes, alcohol or drugs - is not true.

"We can trust people. They are wise enough," said Claudie Meyers from Oxfam GB, which has already given checks of around $60 to 7,000 families in the northwest and plans to give out similar amounts to 40,000 more.

"They can prioritize their needs. If I was in this situation, I would buy food. They do the same."

The WFP, which plans to be feeding 6 million people in Pakistan by the end of September, recently concluded a pilot project in Buner district in the northwest where it gave cash vouchers to people rather than food. It found that recipients spent 70 percent of the money on food and the distribution costs were around five percent cheaper than trucking in food.

The study also reported a significant boost to local shops....

Paul Harvey, an independent aid consultant who has studied the use of cash in emergency situations, said that so long as aid groups were responsible, it was a very effective response. He said that in reality a mix of food, other aid and cash was often the ideal choice.

"Cash should be part of the tool box and could be used more than it currently it is," he said. "People prefer having cash. It is a more dignified way of doing things."